bwxt-20200930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________________________________________________________________________________________________________

FORM 10-Q

_________________________________________________________________________________________________________________________________


(Mark One)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020.


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File No. 001-34658

BWX TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

__________________________________________________________________________________________________________________________________

Delaware

80-0558025

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

800 Main Street, 4th Floor

Lynchburg,

Virginia

24504

(Address of principal executive offices)

(Zip Code)

Registrant's telephone number, including area code: (980) 365-4300

_________________________________________________________________________________________________________________________________


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	BWXT	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant's common stock outstanding at October 29, 2020 was 95,309,561.

Table of Contents

BWX TECHNOLOGIES, INC.

INDEX – FORM 10-Q



		PAGE
PART I – FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements	2
	Condensed Consolidated Balance Sheets
	September 30, 2020 and December 31, 2019 (Unaudited)	2
	Condensed Consolidated Statements of Income
	Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income
	Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)	5
	Condensed Consolidated Statements of Stockholders' Equity
	Three Months Ended March 31, June 30 and September 30, 2020 and 2019 (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows
	Nine Months Ended September 30, 2020 and 2019 (Unaudited)	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	33

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 6.	Exhibits	35

Signatures		36

Table of Contents

PART I

FINANCIAL INFORMATION

Item 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

BWX TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS


	September 30, 2020		December 31, 2019
	(Unaudited) (In thousands)
Current Assets:
Cash and cash equivalents	$	44,662	$	86,540
Restricted cash and cash equivalents	3,070		3,056
Investments	3,699		5,843
Accounts receivable – trade, net	85,332		56,721
Accounts receivable – other	29,566		13,426
Retainages	72,130		46,670
Contracts in progress	430,470		376,037
Other current assets	40,671		41,462
Total Current Assets	709,600		629,755
Property, Plant and Equipment, Net	715,098		580,241
Investments	7,531		7,620
Goodwill	275,966		275,502
Deferred Income Taxes	55,115		58,689
Investments in Unconsolidated Affiliates	73,638		70,116
Intangible Assets	189,028		191,392
Other Assets	98,338		95,598
TOTAL	$	2,124,314	$	1,908,913

See accompanying notes to condensed consolidated financial statements.

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BWX TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

LIABILITIES AND STOCKHOLDERS' EQUITY


	September 30, 2020		December 31, 2019
	(Unaudited) (In thousands, except share and per share amounts)
Current Liabilities:
Current maturities of long-term debt	$	—	$	14,711
Accounts payable	162,482		170,678
Accrued employee benefits	79,071		82,640
Accrued liabilities – other	69,023		52,213
Advance billings on contracts	67,066		75,425
Accrued warranty expense	4,909		9,042

Total Current Liabilities	382,551		404,709
Long-Term Debt	902,197		809,442
Accumulated Postretirement Benefit Obligation	21,942		23,259
Environmental Liabilities	85,391		80,368
Pension Liability	150,030		172,508
Other Liabilities	32,123		14,515
Commitments and Contingencies (Note 6)
Stockholders' Equity:
Common stock, par value $0.01 per share, authorized 325,000,000 shares; issued 126,970,913 and 126,579,285 shares at September 30, 2020 and December 31, 2019, respectively	1,270		1,266
Preferred stock, par value $0.01 per share, authorized 75,000,000 shares; No shares issued	—		—
Capital in excess of par value	148,272		134,069
Retained earnings	1,502,571		1,344,383
Treasury stock at cost, 31,664,602 and 31,266,670 shares at September 30, 2020 and December 31, 2019, respectively	(1,093,519)		(1,068,164)
Accumulated other comprehensive income (loss)	(8,408)		(7,448)
Stockholders' Equity – BWX Technologies, Inc.	550,186		404,106
Noncontrolling interest	(106)		6
Total Stockholders' Equity	550,080		404,112
TOTAL	$	2,124,314	$	1,908,913

See accompanying notes to condensed consolidated financial statements.

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BWX TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(Unaudited) (In thousands, except share and per share amounts)
Revenues	$	519,878	$	506,000	$	1,566,606	$	1,393,685
Costs and Expenses:
Cost of operations	373,783		357,732		1,133,760		999,390
Research and development costs	2,933		5,125		11,565		15,631
Losses (gains) on asset disposals and impairments, net	25		(6)		324		145
Selling, general and administrative expenses	62,638		52,561		170,733		158,296
Total Costs and Expenses	439,379		415,412		1,316,382		1,173,462
Equity in Income of Investees	8,271		7,874		19,247		22,418
Operating Income	88,770		98,462		269,471		242,641
Other Income (Expense):
Interest income	161		232		453		784
Interest expense	(7,701)		(8,858)		(23,533)		(27,103)
Other – net	10,652		4,670		28,019		18,795
Total Other Income (Expense)	3,112		(3,956)		4,939		(7,524)
Income before Provision for Income Taxes	91,882		94,506		274,410		235,117
Provision for Income Taxes	18,687		19,508		61,199		52,009
Net Income	$	73,195	$	74,998	$	213,211	$	183,108
Net Income Attributable to Noncontrolling Interest	(24)		(188)		(283)		(442)
Net Income Attributable to BWX Technologies, Inc.	$	73,171	$	74,810	$	212,928	$	182,666
Earnings per Common Share:
Basic:
Net Income Attributable to BWX Technologies, Inc.	$	0.77	$	0.78	$	2.23	$	1.92
Diluted:
Net Income Attributable to BWX Technologies, Inc.	$	0.76	$	0.78	$	2.22	$	1.91
Shares used in the computation of earnings per share (Note 10):
Basic	95,483,003		95,420,626		95,450,994		95,344,349
Diluted	95,730,696		95,811,198		95,706,880		95,769,919

See accompanying notes to condensed consolidated financial statements.

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BWX TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(Unaudited) (In thousands)
Net Income	$	73,195	$	74,998	$	213,211	$	183,108
Other Comprehensive Income (Loss):
Currency translation adjustments	8,704		(2,535)		(2,380)		2,703
Derivative financial instruments:
Unrealized gains (losses) arising during the period, net of tax (provision) benefit of $(12), $79, $20 and $469, respectively	32		(248)		(59)		(1,323)
Reclassification adjustment for (gains) losses included in net income, net of tax provision (benefit) of $79, $26, $(27) and $5, respectively	(232)		(72)		99		(10)
Amortization of benefit plan costs, net of tax benefit of $(141), $(130), $(475) and $(421), respectively	688		519		1,907		1,523
Unrealized losses on investments arising during the period, net of tax benefit (provision) of $1, $0, $(1) and $(10), respectively	(81)		(54)		(527)		(3)
Other Comprehensive Income (Loss)	9,111		(2,390)		(960)		2,890
Total Comprehensive Income	82,306		72,608		212,251		185,998
Comprehensive Income Attributable to Noncontrolling Interest	(29)		(188)		(283)		(442)
Comprehensive Income Attributable to BWX Technologies, Inc.	$	82,277	$	72,420	$	211,968	$	185,556

See accompanying notes to condensed consolidated financial statements.

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BWX TECHNOLOGIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY


	Common Stock			Capital In Excess of Par Value				Accumulated Other Comprehensive Income (Loss)								Total Stockholders' Equity
	Shares	Par Value				Retained Earnings				Treasury Stock		Stockholders' Equity		Noncontrolling Interest
		(In thousands, except share and per share amounts)
Balance December 31, 2019	126,579,285	$	1,266	$	134,069	$	1,344,383	$	(7,448)	$	(1,068,164)	$	404,106	$	6	$	404,112
Net income	—	—		—		75,499		—		—		75,499		121		75,620
Dividends declared ($0.19 per share)	—	—		—		(18,254)		—		—		(18,254)		—		(18,254)
Currency translation adjustments	—	—		—		—		(11,940)		—		(11,940)		—		(11,940)
Derivative financial instruments	—	—		—		—		733		—		733		—		733
Defined benefit obligations	—	—		—		—		610		—		610		—		610
Available-for-sale investments	—	—		—		—		(600)		—		(600)		—		(600)
Exercises of stock options	56,431	1		1,331		—		—		—		1,332		—		1,332
Shares placed in treasury	—	—		—		—		—		(25,076)		(25,076)		—		(25,076)
Stock-based compensation charges	252,943	2		3,100		—		—		—		3,102		—		3,102
Distributions to noncontrolling interests	—	—		—		—		—		—		—		(127)		(127)
Balance March 31, 2020 (unaudited)	126,888,659	$	1,269	$	138,500	$	1,401,628	$	(18,645)	$	(1,093,240)	$	429,512	$	—	$	429,512
Net income	—	—		—		64,258		—		—		64,258		138		64,396
Dividends declared ($0.19 per share)	—	—		—		(18,244)		—		—		(18,244)		—		(18,244)
Currency translation adjustments	—	—		—		—		856		—		856		—		856
Derivative financial instruments	—	—		—		—		(493)		—		(493)		—		(493)
Defined benefit obligations	—	—		—		—		609		—		609		—		609
Available-for-sale investments	—	—		—		—		154		—		154		—		154
Exercises of stock options	22,556	—		537		—		—		—		537		—		537
Shares placed in treasury	—	—		—		—		—		(47)		(47)		—		(47)
Stock-based compensation charges	38,667	—		4,375		—		—		—		4,375		—		4,375
Distributions to noncontrolling interests	—	—		—		—		—		—		—		(123)		(123)
Balance June 30, 2020 (unaudited)	126,949,882	$	1,269	$	143,412	$	1,447,642	$	(17,519)	$	(1,093,287)	$	481,517	$	15	$	481,532
Net income	—	—		—		73,171		—		—		73,171		24		73,195
Dividends declared ($0.19 per share)	—	—		—		(18,242)		—		—		(18,242)		—		(18,242)
Currency translation adjustments	—	—		—		—		8,704		—		8,704		—		8,704
Derivative financial instruments	—	—		—		—		(200)		—		(200)		—		(200)
Defined benefit obligations	—	—		—		—		688		—		688		—		688
Available-for-sale investments	—	—		—		—		(81)		—		(81)		—		(81)
Exercises of stock options	—	—		199		—		—		—		199		—		199
Shares placed in treasury	—	—		—		—		—		(232)		(232)		—		(232)
Stock-based compensation charges	21,031	1		4,661		—		—		—		4,662		—		4,662
Distributions to noncontrolling interests	—	—		—		—		—		—		—		(145)		(145)
Balance September 30, 2020 (unaudited)	126,970,913	$	1,270	$	148,272	$	1,502,571	$	(8,408)	$	(1,093,519)	$	550,186	$	(106)	$	550,080

Table of Contents


	Common Stock			Capital In Excess of Par Value				Accumulated Other Comprehensive Income (Loss)								Total Stockholders' Equity
	Shares	Par Value				Retained Earnings				Treasury Stock		Stockholders' Equity		Noncontrolling Interest
		(In thousands, except share and per share amounts)
Balance December 31, 2018	125,871,866	$	1,259	$	115,725	$	1,166,762	$	(10,289)	$	(1,037,795)	$	235,662	$	39	$	235,701
Recently adopted accounting standards	—	—		—		(1,219)		77		—		(1,142)		—		(1,142)
Net income	—	—		—		48,978		—		—		48,978		132		49,110
Dividends declared ($0.17 per share)	—	—		—		(16,323)		—		—		(16,323)		—		(16,323)
Currency translation adjustments	—	—		—		—		943		—		943		—		943
Derivative financial instruments	—	—		—		—		(582)		—		(582)		—		(582)
Defined benefit obligations	—	—		—		—		511		—		511		—		511
Available-for-sale investments	—	—		—		—		24		—		24		—		24
Exercises of stock options	58,655	1		1,275		—		—		—		1,276		—		1,276
Shares placed in treasury	—	—		—		—		—		(29,027)		(29,027)		—		(29,027)
Stock-based compensation charges	449,275	4		2,525		—		—		—		2,529		—		2,529
Distributions to noncontrolling interests	—	—		—		—		—		—		—		(146)		(146)
Balance March 31, 2019 (unaudited)	126,379,796	$	1,264	$	119,525	$	1,198,198	$	(9,316)	$	(1,066,822)	$	242,849	$	25	$	242,874
Net income	—	—		—		58,878		—		—		58,878		122		59,000
Dividends declared ($0.17 per share)	—	—		—		(16,301)		—		—		(16,301)		—		(16,301)
Currency translation adjustments	—	—		—		—		4,295		—		4,295		—		4,295
Derivative financial instruments	—	—		—		—		(431)		—		(431)		—		(431)
Defined benefit obligations	—	—		—		—		493		—		493		—		493
Available-for-sale investments	—	—		—		—		27		—		27		—		27
Exercises of stock options	32,023	—		757		—		—		—		757		—		757
Shares placed in treasury	—	—		—		—		—		(260)		(260)		—		(260)
Stock-based compensation charges	4,927	—		3,823		—		—		—		3,823		—		3,823
Distributions to noncontrolling interests	—	—		—		—		—		—		—		(128)		(128)
Balance June 30, 2019 (unaudited)	126,416,746	$	1,264	$	124,105	$	1,240,775	$	(4,932)	$	(1,067,082)	$	294,130	$	19	$	294,149
Net income	—	—		—		74,810		—		—		74,810		188		74,998
Dividends declared ($0.17 per share)	—	—		—		(16,306)		—		—		(16,306)		—		(16,306)
Currency translation adjustments	—	—		—		—		(2,535)		—		(2,535)